Case study

Please help me do this assignment. No Plagiarize.you need do one for Nissan, one for Porsche.See rubric(you can begin at NO.4 ) in the flie and requirement :we are interested in the valuation of your company. Assume risk free rate of 2 percent and expected return on market of 10 percent.Provide analysis of critical variables. Compute elasticities. One key variable will be opportunity cost of equity. With b=1, that is 10 percent. Like to see a computation of technological lead over competitors using BDF model or Holt Module given in your text. What would be the impact of a 3 percent increase in interest rates and required rates of return on equity. Analysis of Porter’s Five Forces. Strength of competitors, Threat of New Entries, Threat of Substitute goods, Strength of Consumers, Strength of Suppliers (including labor).
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Case Study Grading
Points
Items to be included in spreadsheet:
(1 ) Include 5 years of historical balance sheets and income statements
2
(1a) All spreadsheet data should be easily read and easily navigated. It should
all be on one spreadsheet, so the reader need not travel back and forth
between numerous sources.
6
(1b) On spreadsheets, all cells should contain their formulas, so the reader
can see what items are included in a total.
6
(1c) All spreadsheet totals should add up.
4
(1d) Retained earning should reconcile from one year to the next. In other
words: beginning retained earnings plus net income minus dividends should
equal ending retained earnings.
4
(2) Project 5 years of future balance sheets and income statements
2
(2a) In your balance sheets, separate out operating cash from excess cash and
cash equivalents.
4
(2b) In your projected balance sheets, assume no change in excess cash or
non operating assets.
na
(2c) Consider this report a first pass; and assume that there is no change in
long term debt obligations, notes payable, common stock ir treasury stock.
That will make your free cash flow computation easier.
na
(2d) If you are projecting a change in deferred tax assets or deferred tax
liabilities, explain why you are projecting that change. (Remember that, in the
long run, deferred tax assets and deferred tax liabilities zero out, since they
are all based upon timing differences which will reverse.)
na
(2e) If you are projecting a change in non-operating assets explain why.
2
(2f) To make your projected liabilities and equity equal to your projected
assets, include a line item between your liability section and equity section
called Flexible Financing. Generally, this will represent cumulative additional
funds needed AFN. And if it is negative, it will generally indicate cumulative
free cash flow. Use the Flexible financing account as a balancing account.
5
(2g) Assume no change in Other Accumulated Comprehensive Income. This
account appears in the equity section of the balance sheet and represents the
unrealized gain or loss on marketable securities and foreign exchange. It is
only a temporary account and should zero out over time.
na
(3a) Compute free cash flow for all years.
25
(3b) Show the disposition of free cash flow in all years, both historical and
projected.
15
First Submission
75
Note: The first phase counts for 75 percent of your case study
grade. If you fail to score at least 30 out of 40 points on parts 3(a)
and 3(b), you will not be eligible to continue with the case study
assignment and your cumulative grade will be limited to points
earned to that point.
Additional items to be included in final report.
Respond to each of these questions in the final report, repeating the question
number and question before responding.
(4a) In the historical period, were there any acquisitions? And if so, were they
stock for stock, assets for stock, etc.?
1
(4b) Did another firm acquire shares in your company in the historical
period? And if so, were they stock for stock, or assets for stock, etc.?
1
(4c) If the firm is growing, is its growth real, or is it merely growth through
acquisition?
2
(5a) Justify your revenue projections and your gross margin assumptions.
na
(5b) Explain which costs are fixed and which costs are variable and which
costs have a fixed and variable component. If some of your costs are fixed,
then there will be economies of scale, and your profit margins should
improve.
na
(5c) If the provision for income tax differs significantly from 40 percent,
explain why the difference.
na
(6) Analyze the firm in terms of Porters Five Forces: In other words outline to
what extent the firm’s growth and profitability might be limited by (i) the
power of its consumers, (ii) competition from rival producers, (iii) potential
competition from new entrants into its market, (iv) the power of its input
suppliers, or (v) the existence of substitute goods.
na
(7) If your firm is in the technology sector, explain the firm’s position in its
industry. Is it a market leader? And if so, is it a market leader based upon its
technological advantage? And what must the firm do to remain a leader in its
industry?
2
(8) Are there any legal problems, or outstanding lawsuits pending, or lawsuits
which have recently been settled? Explain. And explain what impact that
might have on future results.
na
(9) Do a ratio analysis to compare your firm with 3 firms in its industry, but
only report key ratios, which may include PE ratio, ROE, ROA, net profit
margin, gross profit margin. A comparative Du Pont analysis might be
helpful. But do not report other ratios, unless there is a significant difference.
If your company is trading at a significantly higher PE ration than other firms
in its industry, is there an opportunity to make acquisitions on a stock for
stock basis? Identify potential acquisition targets.
na
(9a) Ratio comparisons should be presented in tables which are self
explanatory.
na
(9b) Ratio comparisons should not be presented in narrative form.
na
(10) If the firm is facing possible insolvency, explain. If there is a possibility of
insolvency, you may wish to compute break even point.
2
(11) If your Flexible Financing account has a large positive balance, indicating
AFN, outline your plan for how the company will arrange outside financing.
Will it borrow on a short term basis, issue long term debt, or sell additional
shares? And do you estimate any problem with arranging that necessary
financing?
na
(12) If your Flexible Financing account has a large negative balance,
indicating FCF, how will you use that FCF? Will you begin to pay dividends?
Buy back stock? Use the FCF for acquisitions?
na
(13) Place a value on the stock of your firm and support your computation.
5
(13a) Any computations, such as valuation, should be done in the form of
tables which are easy to read. Use the same format as the valuation tables in
PowerPoint lecture slides. Tables should be self-explanatory. In other words,
the reader should not be forced to search the document for missing
information. Tables should clearly state your assumptions.
3
(13b) A separate table should be presented to compute Horizon value.
2
(13c) And a second table should be presented incorporating the FCF of years 15, along with the Horizon value, to arrive at valuation.
3
(13d) Your valuation should approximate the current market value of the
stock. If it does not approximate the current market value of the stock, then
you need to rework your projected cash flows and Horizon values, in order to
come up with a reasonable valuation.
4
(14) If you quote any analyst or news source, show your sources. Do not
plagiarize, as plagiarism is a serious breach of the academic honor code.
2
Total points possible
102
Comments
Liabilities and equity should include FFA and
should agrre with total assets.
Ten days of sales is reasonable, in the absence
of any other estimate.
Many students increased their excess cash
holdings.
By projecting all expenses as a fixed percentage
of sales, you are assuming that all costs are
variable and that there is no fixed component.
Generally, students did a really good job on
Porter’s Five Forces.
Only applied to Apple and Samsung.
If the reader has to guess where the numbers
came from, or if he has to navigate all over the
spreadsheet to see where the numbers came
from,it is not easy to read.
Direct quotation need to be in quotation marks
with footnotes.
Historic
Period
2012
2013
88,425,715,850
73,048,818,633
15,376,897,217
9,981,857,162
90,498,418,676
75,396,675,136
15,101,743,540
10,181,494,305
4,643,178,372
253,109,364
4,760,844,235
1,348,433,204
3,412,411,031
4,620,866,394
258,171,551
4,856,061,120
1,375,401,868
3,480,659,252
Balance Sheet
Assets
Cash
and equivalents
Short-term
investments
Accounts receivable,
net
Inventories
Other current assets
Total current assets
Fixed assets (net)
Intangibles
Goodwill
Long-term investments
Other fixed assets
Total assets
6,364,975,852
991,863,280
0
10,366,519,636
5,028,054,795
69,997,384,988
40,195,777,459
1,121,288,027
0
0
47,985,521,963
117,982,906,950
6,492,275,369
1,011,700,546
0
10,573,850,029
5,128,615,891
71,397,332,688
40,999,693,008
1,143,713,788
0
0
48,945,232,402
120,342,565,089
Accounts payable
Accrued expenses
Short-term
debt
Other
current
liabilities
Total current liabilities
Long-term debt
Other liabilities
Total liabilities
12,311,650,035
6,854,787,944
15,661,896,279
7,188,363,802
42,016,698,061
27,927,026,378
13,619,432,425
83,563,156,865
12,557,883,036
6,991,883,703
15,975,134,205
7,332,131,078
42,857,032,022
28,485,566,906
13,891,821,074
85,234,420,002
Income Statement
Revenues:
Total revenues
Cost of goods sold
Gross profit
Operating Expenses:
Selling, general and
administrative
Interest expense, net
Pre-tax income
Income taxes
Net income
Additional Fund Needed
– Cumulative (Surplus)
(1,597,746,526)
(1,629,701,457)
Shareholders’ equity
Common Stock
Paid-in capital
Retained earnings
Treasury stock
0
7,412,139,718
29,983,255,489
(1,377,898,595)
0
7,560,382,512
30,582,920,599
(1,405,456,567)
Total Liabilities and Equity
119,580,653,476
121,972,266,546
The first step in computing FCF is to restate do a Penman restatem
That means to break the BS down into Net operating assets, non-o
stakeholder claims.
Note that assets are treated as a negative (since they represent a u
and equity are treated as positive (since they represent a source of
Total assets
Less non operating assets
Marketable securities
(short term Investment)
Operating liabilities
Accounts payable
Accruals
Short term debt
Other Current liabilities
Other non current liabilities
Net operating assets
(117,982,906,950)
5,643,728
(120,342,565,089)
1,011,700,546
12,311,650,035
6,854,787,944
15,661,896,279
7,188,363,802
13,619,432,425
(62,341,132,736)
12,557,883,036
6,991,883,703
15,975,134,205
7,332,131,078
13,891,821,074
(62,582,011,447)
(5,643,728)
(1,011,700,546)
(62,346,776,464)
(63,593,711,993)
0
Additional Fund Needed
– Cumulative (Surplus)
27,927,026,378
Long term debt
0
Common stock
7,412,139,718
Paid In capital
29,983,255,489
Retained earnings
(1,377,898,595)
Accumulated other(treasury sock)
0
28,485,566,906
0
7,560,382,512
30,582,920,599
(1,405,456,567)
63,944,522,990
65,223,413,450
Non operating assets
Book value of the firm
Stakeholder claims
1,597,746,526
Total
Changes
1,629,701,457
The next step is to compute changes by subtracting out the balanc
Total assets
Less non operating assets
Marketable securities
(short term Investment)
Operating liabilities
Accounts payable
Accruals
Short term debt
Other Current liabilities
Other non current liabilities
Net operating assets
(2,359,658,139)
Non operating assets
(1,006,056,818)
Book value of the firm
(1,246,935,529)
Additional Fund Needed
Long term debt
Common stock
Paid In capital
Retained earnings
Accumulated other(treasury sock)
Stakeholder claims
246,233,001
137,095,759
313,237,926
143,767,276
272,388,649
(240,878,711)
0
558,540,528
0
148,242,794
599,665,110
(27,557,972)
1,278,890,460
31,954,931
Total
Computation of FCF
1,006,056,818
The final step is to use those change numbers to compute FCF and
Net Income
Add back interest expense
Less tax on Interest expense
NOPAT
(Additions to Net operating assets)
FCF
3,480,659,252
258,171,551
(103,268,620)
3,635,562,183
(240,878,711)
3,394,683,471
Additional Fund Needed (Surplus)
(Pay off for long term debt)
Additional common
stock isssued/(Shares
repurchased)
0
558,540,528
0
Additional Paid in capital
(Dividends paid)
(Interest paid net off tax)
(Increase) in non-operating assets
Increase/(Decrease) in
accumulated other
Dispositions of FCF
Total
148,242,794
(2,880,994,142)
(154,902,931)
(1,006,056,818)
(27,557,972)
(3,362,728,541)
31,954,931
Positive means source of cash and negative represents a dispositio
Historical and Projected Financial Statements
Nissan Company
2014
2015
2016
98,514,377,037
81,161,435,084
17,352,941,953
12,669,324,129
106,903,848,198
86,849,817,754
20,054,030,444
14,513,227,428
114,556,706,706
92,071,863,903
22,484,842,803
15,029,632,939
6,629,542,075
269,505,500
4,975,076,975
1,081,245,501
3,893,831,474
7,736,697,771
274,110,053
6,460,359,873
1,854,444,440
4,605,915,433
7,979,259,300
233,125,969
6,888,089,545
1,692,959,173
5,195,130,372
7,733,239,320
126,590,615
0
10,825,057,687
5,555,955,917
80,909,710,538
44,715,884,109
867,751,885
0
0
57,272,385,644
138,182,067,988
7,152,548,337
391,434,724
0
12,311,308,576
7,293,235,903
96,962,114,827
49,491,940,336
1,075,653,711
0
0
63,232,472,938
160,194,550,173
8,634,579,539
689,660,410
0
11,978,329,207
6,937,785,955
101,005,308,190
49,028,272,838
1,229,977,727
0
0
62,271,587,200
163,276,895,390
14,208,880,287
8,088,914,779
18,747,882,195
7,703,917,662
48,749,594,923
33,843,620,434
14,791,807,985
97,385,023,342
14,608,190,507
9,407,966,437
26,474,328,784
9,820,920,505
60,311,406,233
35,834,410,579
18,593,492,393
114,739,309,205
0
8,786,798,410
30,506,158,005
24,276,649,793
63,569,606,208
35,015,725,480
20,316,619,040
118,901,950,728
1,496,745,878
3,463,470,370
(807,680,081)
0
7,560,523,482
33,143,302,729
(1,403,527,443)
0
7,561,294,115
35,823,621,713
(1,393,145,230)
0
7,571,434,522
39,008,517,546
(1,397,327,325)
136,685,322,110
156,731,079,803
164,084,575,471
state do a Penman restatement of the Balance Sheet
Net operating assets, non-operating assets, and
ve (since they represent a use of cash), and liabilities
e they represent a source of cash).
(138,182,067,988)
126,590,615
(160,194,550,173) (163,276,895,390)
391,434,724
689,660,410
14,208,880,287
8,088,914,779
18,747,882,195
7,703,917,662
14,791,807,985
(74,514,074,465)
14,608,190,507
9,407,966,437
26,474,328,784
9,820,920,505
18,593,492,393
(80,898,216,823)
0
8,786,798,410
30,506,158,005
24,276,649,793
20,316,619,040
(78,701,009,732)
(126,590,615)
(391,434,724)
(689,660,410)
(74,640,665,080)
(81,289,651,547)
(79,390,670,142)
0
0
0
33,843,620,434
0
7,560,523,482
33,143,302,729
(1,403,527,443)
35,834,410,579
0
7,561,294,115
35,823,621,713
(1,393,145,230)
35,015,725,480
0
7,571,434,522
39,008,517,546
(1,397,327,325)
73,143,919,202
77,826,181,177
80,198,350,223
(1,496,745,878)
(3,463,470,370)
807,680,081
subtracting out the balances from the previous year.
(17,839,502,899)
(22,012,482,185)
(3,082,345,217)
(885,109,931)
264,844,109
298,225,686
1,650,997,251
1,097,031,076
2,772,747,990
371,786,584
899,986,911
(11,932,063,018)
399,310,220
1,319,051,658
7,726,446,589
2,117,002,843
3,801,684,408
(6,384,142,358)
(14,608,190,507)
(621,168,027)
4,031,829,221
14,455,729,288
1,723,126,647
2,197,207,091
885,109,931
(264,844,109)
(298,225,686)
(11,046,953,087)
(6,648,986,467)
1,898,981,405
0
5,358,053,528
0
140,970
2,560,382,130
1,929,124
7,920,505,752
0
1,990,790,145
0
770,633
2,680,318,984
10,382,213
4,682,261,975
0
(818,685,099)
0
10,140,407
3,184,895,833
(4,182,095)
2,372,169,046
(3,126,447,335)
(1,966,724,492)
4,271,150,451
mbers to compute FCF and the Disposition of FCF.
3,893,831,474
269,505,500
(107,802,200)
4,055,534,774
(11,932,063,018)
(7,876,528,244)
4,605,915,433
274,110,053
(109,644,021)
4,770,381,465
(6,384,142,358)
(1,613,760,893)
5,195,130,372
233,125,969
(93,250,388)
5,335,005,953
2,197,207,091
7,532,213,044
0
5,358,053,528
0
1,990,790,145
0
(818,685,099)
0
0
0
140,970
(1,333,449,344)
(161,703,300)
885,109,931
770,633
(1,925,596,449)
(164,466,032)
(264,844,109)
10,140,407
(2,010,234,539)
(139,875,581)
(298,225,686)
1,929,124
4,750,080,909
10,382,213
(352,963,599)
(4,182,095)
(3,261,062,593)
(3,126,447,335)
(1,966,724,492)
ative represents a disposition, or distribution of cash.
4,271,150,451
Statements
2017
2018
2019
2020
116,847,840,840
93,913,301,181
22,934,539,659
70,978,761,522
119,184,797,657
95,791,567,205
23,393,230,452
72,398,336,752
121,568,493,610
97,707,398,549
23,861,095,061
73,846,303,487
123,999,863,482
99,661,546,520
24,338,316,963
75,323,229,557
8,138,844,486
237,788,488
7,025,851,336
1,726,818,356
5,299,032,979
8,301,621,376
242,544,258
7,166,368,363
1,761,354,724
5,405,013,639
8,467,653,803
247,395,143
7,309,695,730
1,796,581,818
5,513,113,912
8,637,006,879
252,343,046
7,455,889,644
1,832,513,454
5,623,376,190
8,807,271,130
703,453,618
0
12,217,895,791
7,076,541,674
103,025,414,354
50,008,838,295
1,254,577,282
0
0
63,517,018,944
166,542,433,298
8,983,416,552
717,522,691
0
12,462,253,707
7,218,072,508
105,085,922,641
51,009,015,061
1,279,668,827
0
0
64,787,359,323
169,873,281,964
9,163,084,883
731,873,144
0
12,711,498,781
7,362,433,958
107,187,641,094
52,029,195,362
1,305,262,204
0
0
66,083,106,509
173,270,747,603
9,346,346,581
746,510,607
0
12,965,728,757
7,509,682,637
109,331,393,916
53,069,779,269
1,331,367,448
0
0
67,404,768,640
176,736,162,555
0
8,962,534,378
31,116,281,165
24,762,182,789
64,840,998,332
35,716,039,990
20,722,951,421
121,279,989,743
0
9,141,785,066
31,738,606,788
25,257,426,445
66,137,818,299
36,430,360,789
21,137,410,449
123,705,589,537
0
9,324,620,767
32,373,378,924
25,762,574,974
67,460,574,665
37,158,968,005
21,560,158,658
126,179,701,328
0
9,511,113,182
33,020,846,503
26,277,826,473
68,809,786,158
37,902,147,365
21,991,361,831
128,703,295,355
0
0
0
0
0
7,722,863,212
39,788,687,897
(1,425,273,872)
0
7,877,320,477
40,584,461,655
(1,453,779,349)
0
8,034,866,886
41,396,150,888
(1,482,854,936)
0
8,195,564,224
42,224,073,906
(1,512,512,035)
166,542,433,298
169,873,281,964
173,270,747,603
(166,542,433,298) (169,873,281,964) ############
703,453,618
717,522,691
0
0
8,962,534,378
9,141,785,066
31,116,281,165
31,738,606,788
24,762,182,789
25,257,426,445
20,722,951,421
21,137,410,449
(80,275,029,927) (81,880,530,525)
731,873,144
176,736,162,555
(176,736,162,555)
746,510,607
0
9,324,620,767
32,373,378,924
25,762,574,974
21,560,158,658
(83,518,141,136)
0
9,511,113,182
33,020,846,503
26,277,826,473
21,991,361,831
(85,188,503,958)
(731,873,144)
(746,510,607)
(80,978,483,545) (82,598,053,216) (84,250,014,280)
(85,935,014,566)
(703,453,618)
(717,522,691)
0
35,716,039,990
0
7,722,863,212
39,788,687,897
(1,425,273,872)
0
36,430,360,789
0
7,877,320,477
40,584,461,655
(1,453,779,349)
0
37,158,968,005
0
8,034,866,886
41,396,150,888
(1,482,854,936)
0
37,902,147,365
0
8,195,564,224
42,224,073,906
(1,512,512,035)
81,802,317,227
83,438,363,572
85,107,130,843
86,809,273,460
823,833,683
840,310,356
857,116,563
874,258,895
(3,265,537,908)
(3,330,848,666)
(3,397,465,639)
(3,465,414,952)
13,793,208
14,069,072
14,350,454
14,637,463
0
175,735,968
610,123,160
485,532,996
406,332,381
(1,574,020,195)
0
179,250,688
622,325,623
495,243,656
414,459,028
(1,605,500,599)
0
182,835,701
634,772,136
505,148,529
422,748,209
(1,637,610,611)
0
186,492,415
647,467,578
515,251,499
431,203,173
(1,670,362,823)
(13,793,208)
(14,069,072)
(14,350,454)
(14,637,463)
(1,587,813,403)
(1,619,569,671)
(1,651,961,064)
(1,685,000,286)
807,680,081
700,314,510
0
151,428,690
780,170,351
(27,946,547)
1,603,967,004
0
714,320,800
0
154,457,264
795,773,758
(28,505,477)
1,636,046,345
0
728,607,216
0
157,546,410
811,689,233
(29,075,587)
1,668,767,271
0
743,179,360
0
160,697,338
827,923,018
(29,657,099)
1,702,142,617
16,153,602
16,476,674
16,806,207
17,142,331
5,299,032,979
237,788,488
(95,115,395)
5,441,706,072
(1,574,020,195)
3,867,685,878
5,405,013,639
242,544,258
(97,017,703)
5,550,540,194
(1,605,500,599)
3,945,039,595
5,513,113,912
247,395,143
(98,958,057)
5,661,550,998
(1,637,610,611)
4,023,940,387
5,623,376,190
252,343,046
(100,937,218)
5,774,782,018
(1,670,362,823)
4,104,419,195
807,680,081
700,314,510
0
714,320,800
0
728,607,216
0
743,179,360
0
0
0
0
151,428,690
(4,518,862,629)
(142,673,093)
(13,793,208)
154,457,264
(4,609,239,881)
(145,526,555)
(14,069,072)

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